What is your opinion of the BitLicense regulations proposed by Ben Lawsky?
Money Transmitter License
Asked by Question Bot07/Aug/20151 answer
1 Answer
F
Faisal Khan
Answered 07/Aug/2015
There is a great breakdown by Marco Santori (who is an attorney and specializes in Bitcoin related ventures). His opinion can be read here: What New York's Proposed Regulations Mean for Bitcoin Businesses
The proposed rules are essentially no different from the Money Transmitter License application that NY's DFS has. The added components in this application are things that take into account the digital nature of crypto-currencies. Things like you need to have a penetration test done, you need a CISO (Chief Information Security Officer), etc.
The bonding and net worth requirements are not spelled out, but bonding would presumably be capped out at $2 Million (which is pretty much the common case for each State capping it to $2 Million). The net worth would / might be an issue. I think NY might require that the licensee match Dollar for Dollar for all outstanding payments the licensee has. Such a match would be reflected in their net worth.
What would be even more interesting is to see which companies would actually provide a surety bond for the Bitcoin space.
The agent / branch assignment would be worth looking into, if NY DFS will ask for additional bonding and net worth requirements for onboarding agents, or if Agents / Branches would be allowed or not.
The anonymity factor can be thrown out. All transactions would need to be unmasked.
The proposed regulations are no surprise for anyone who has dealt with Money Transmitter Licenses.
What you can be assured with is that all the time-lines mentioned for processing and reviewing the application would never be adhered to. NY's DFS doesn't have a stellar reputation when it comes to time-lines. Expect the timeframe from filing to award to be about 1 year (if not more).
Because of this application, a lot of small-cap Bitcoin businesses who were either based in NY or were wanting to get licensed in NY would be left out because of the financials (net worth, surety bonds, permissible investments, etc.) as well as the audit requirements.
The proposed rules are essentially no different from the Money Transmitter License application that NY's DFS has. The added components in this application are things that take into account the digital nature of crypto-currencies. Things like you need to have a penetration test done, you need a CISO (Chief Information Security Officer), etc.
The bonding and net worth requirements are not spelled out, but bonding would presumably be capped out at $2 Million (which is pretty much the common case for each State capping it to $2 Million). The net worth would / might be an issue. I think NY might require that the licensee match Dollar for Dollar for all outstanding payments the licensee has. Such a match would be reflected in their net worth.
What would be even more interesting is to see which companies would actually provide a surety bond for the Bitcoin space.
The agent / branch assignment would be worth looking into, if NY DFS will ask for additional bonding and net worth requirements for onboarding agents, or if Agents / Branches would be allowed or not.
The anonymity factor can be thrown out. All transactions would need to be unmasked.
The proposed regulations are no surprise for anyone who has dealt with Money Transmitter Licenses.
What you can be assured with is that all the time-lines mentioned for processing and reviewing the application would never be adhered to. NY's DFS doesn't have a stellar reputation when it comes to time-lines. Expect the timeframe from filing to award to be about 1 year (if not more).
Because of this application, a lot of small-cap Bitcoin businesses who were either based in NY or were wanting to get licensed in NY would be left out because of the financials (net worth, surety bonds, permissible investments, etc.) as well as the audit requirements.